Chamber hits back Obama on reform

President Barack Obama ripped the U.S. Chamber of Commerce last week, criticizing the powerful business lobby for its opposition to a key piece of his financial reform package.

And now the Chamber is hitting back, saying in a letter to Rep. Barney Frank (D-Mass.) that a proposed consumer financial protection agency “will have significant and harmful unintended consequences for consumers, businesses, and the overall economy,” according to a draft copy of the letter to Capitol Hill obtained by POLITICO.

“We’ve made clear that only businesses that offer financial services would be affected by this agency. I don't know how many of your butchers are offering financial services,” Obama said to laughter.

But Frank did seek to clarify his legislation after the Chamber started running its ads. “Why would Frank then gone back to make sure that those folks were not included if the Chamber’s ad was so misleading?” asked a Chamber official, who declined to be named going head-to-head with the president.

The Tuesday letter from the Chamber, timed in advance of Frank’s Financial Services Committee voting on the consumer agency legislation this week, is expected to carry the names of other financial and business groups who continue to oppose the watchdog.

The Chamber and its allies continue to argue that the scope of the consumer financial protection agency (CFPA) powers are too broad, extending well beyond companies that are principally engaged in financial services – even after Frank made included a series of exemptions in his draft bill.

The Chamber letter also slams the bill for not shielding national banks and firms from tougher state consumer protection laws. This issue of whether federal consumer protection rules set by the CFPA should preempt state laws is a major point of contention among Democrats on Frank’s panel. Frank has been negotiating the preemption issue with Rep. Melissa Bean (D-Ill.) and told POLITICO last week that he is “pretty optimistic that we’ll work it out.”